Questcor Stock Rebounds On Drug Data, Analyst Upgrade

Questcor Pharmaceuticals (QCOR) continued its rollercoaster ride, popping more than 10% in early trading Tuesday on good prescription data and an analyst's upgrade. Shares were up more than 4%, near 21.15, in late-morning trading.

Questcor said paid prescriptions of its sole drug, Acthar, dropped somewhat from a very strong August, but were still up more than 30% from September 2011. This was the public's first look at what happened in September after Aetna (AET) decided halfway through the month to withdraw coverage of Acthar for all but one minor indication.

Before those numbers emerged, Jefferies analyst Biren Amin upgraded the stock to buy from hold, reversing the downgrade he'd made after the Aetna news came out. In his note to clients, Amin wrote that he talked with payers at the Academy of Managed Care Pharmacy conference last week, and concluded that while many of them were questioning Acthar's efficacy for multiple sclerosis, they were more optimistic about nephrotic syndrome, which is currently the drug's biggest revenue generator.

"The current valuation of $20/share (down 24% from our downgrade) assumes almost complete loss of insurer coverage in NS and MS over the next few years, in line with our worst-case scenario, implying limited downside," Amin wrote.

Questcor's stock plunge, exacerbated by news of a federal probe the next week, put it in the rare position of possessing both the highest possible IBD EPS Rank (99) and the lowest possible Relative Strength Rating (1). The stock is up 23% from its 52-week low, hit last month, but still 64% off the high hit in July.

Questcor Pharmaceuticals (QCOR) continued its rollercoaster ride, popping more than 10% in early trading Tuesday on good prescription data and an analyst's upgrade. Shares were up more than 4%, near 21.15, in late-morning trading.

Questcor said paid prescriptions of its sole drug, Acthar, dropped somewhat from a very strong August, but were still up more than 30% from September 2011. This was the public's first look at what happened in September after Aetna (AET) decided halfway through the month to withdraw coverage of Acthar for all but one minor indication.

Before those numbers emerged, Jefferies analyst Biren Amin upgraded the stock to buy from hold, reversing the downgrade he'd made after the Aetna news came out. In his note to clients, Amin wrote that he talked with payers at the Academy of Managed Care Pharmacy conference last week, and concluded that while many of them were questioning Acthar's efficacy for multiple sclerosis, they were more optimistic about nephrotic syndrome, which is currently the drug's biggest revenue generator.

"The current valuation of $20/share (down 24% from our downgrade) assumes almost complete loss of insurer coverage in NS and MS over the next few years, in line with our worst-case scenario, implying limited downside," Amin wrote.

Questcor's stock plunge, exacerbated by news of a federal probe the next week, put it in the rare position of possessing both the highest possible IBD EPS Rank (99) and the lowest possible Relative Strength Rating (1). The stock is up 23% from its 52-week low, hit last month, but still 64% off the high hit in July.

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